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Taxation

The Netherlands is recognized globally as one of the premier locations for international business operations. An important factor that contributes to this reputation is the favourable taxation climate of the Netherlands.

The main attractive features of the Dutch tax climate include:
 ■ Wide tax treaty network reducing withholding taxes on dividends, interests and royalties.
 ■ No statutory withholding tax on outgoing interest and royalty payments
 ■ Favourable participation exemption regime
 ■ Fiscal unity regime to freely set off profits and losses among group members
 ■ Loss compensation with the possibility to carry-back losses for one year and carry-forward losses for nine years
 ■ Relatively low statutory corporate income tax rate of 25% (20% over the first EuR 200,000.
 ■ Innovation box resulting in an effective corporate tax rate of 5%
 ■ Favourable tax treatment for foreign employees (30% tax ruling)
 ■ Possibility of obtaining advance tax rulings and advanced pricing agreements from the Dutch.

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Corporate income tax

Corporate income tax is levied on the world wide income of non-transparent entities resident in the Netherlands, as well as on the Dutch income of certain non-resident entities.

Participation exemption

The Dutch participation exemption provides for an exemption from corporate income tax of any profit derived from a qualifying equity investment in another company, whether domestic or foreign. As a consequence, dividends and capital gains arising from such shareholdings are tax exempt, while capital losses and acquisition and disposal cost are not deductible.

Fiscal unity

The fiscal unity regime provides for a tax consolidation of companies within a group by filing one consolidated tax return.

Functional currency

It is possible for a Dutch resident entity to calculate its taxable profits on the basis of another currency than the euro, provided that it also prepares its financial accounts in that other currency.

Investment vehicles

The Dutch Ministry of Finance is actively engaged in obtaining and maintaining a prominent international position in the field of investment funds for the Netherlands.

Research & development

The innovation box taxes income from patented know-how at an effective tax rate of 5%. While losses or expenses on innovative activities are deductible at the normal tax rate of 25%. An important condition for the innovation box to apply, is that the royalty is derived from self-developed patented intangible assets.

Loss compensation

In principle, losses can be carried back for one year and carried forward for nine years.

Transfer pricing

The so-called arm’s length principle has traditionally been considered part of the Dutch concept of taxable profits. On January 1, 2002, the arm´s length principle has also been incorporated in the Dutch corporate income tax Act.

Non deductible interest

To discourage companies from financing its activities with excessive debt, certain interest deduction restrictions apply.

Non-resident companies

Non-resident companies could become liable for Dutch corporate income tax in two ways.

Withholding taxes

Bilateral treaties of the Netherlands (as of January 2012)

Avoiding double taxation on income and capital has always been an important issue for the Netherlands. A vast tax treaty network, which includes more than 80 countries, ensures that double taxation on income categories like dividends, interests and royalties, is lifted or limited to reduced rates.

Individual income tax rates (2012)

The individual income tax is levied by type of income and is classified into three boxes.

Expatriates

A special tax regime applies for expatriates.

Value added tax (2012)

In the Netherlands the supply of goods and services by entrepreneurs is taxable with value added tax (“VAT”).

Dutch tax authorities

The Dutch tax authorities has a cooperative attitude towards taxpayers. Their approach can be described as practical rather than formal.

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Contact

For questions or observations please contact

Ron Horsmans

Ron Horsmans

Partner
+31(0)88 277 24 00

Download brochure

Download the complete brochure in pdf format:

Brochure Doing business in the Netherlands

Doing business in the Netherlands

A practical guide designed to give a general overview of the country and of the major applicable regulations for doing business in the Netherlands.